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Reserve Bank of Zimbabwe building in Harare

Clemence Manyukwe News Editor
THE RESERVE Bank of Zimbabwe (RBZ) is set to get additional powers to form companies through the Banking Amendment Bill that was gazetted recently. Section 7 of the RBZ Act outlining the central bank’s powers would be amended by giving the central bank the go-ahead to form companies.

The Banking Amendment Bill will also establish under the Banking Act the office of Financial Public Protector to resolve disputes between financial institutions and their customers. A Financial Sector Oversight Council and a Financial Sector Stability Committee would also be established to ensure stability in the financial sector.

Two laws the RBZ Act and the Deposit Protection Corporation Act will also be amended while the Troubled Financial Institutions (Resolution) Act would be repealed.

“The Reserve Bank of Zimbabwe Act [Chapter 22:15] is amended— in section 7 (“Powers of Bank”) in subsection (1) by the insertion after paragraph (r) of the following paragraph— “(r1)establish companies and other entities for the purpose of— (I) acquiring and settling non-performing loans of banking institutions; or (ii) acquiring, restructuring and disposing of problem or failed banking institutions; (iii) generally, exercising any function conferred on the Bank by or in terms of this Act,” reads part of the Bill.

Another clause will ensure that the central bank will keep shares in three other companies- Home link; the Export Credit Guarantee Corporation of Zimbabwe (Private) Limited and the Zimbabwe Asset Management Corporation (Private) Limited.

The Banking Amendment Bill will also see the establishment of the office of Registrar of Banking Institutions within the RBZ. The office would be required to be impartial and open in the exercise of its functions, while preserving the necessary confidentiality. The Bill would also require the RBZ to consult the Minister of Finance when choosing a curator to take over the administration of a failing banking institution.

“The new section 48A which this clause will insert in the Banking Act will give the Reserve Bank power to take immediate and effective action to deal with problem banking institutions, i.e. institutions that are liable to collapse. The plans may extend to merging two or more banking institutions, transferring the assets of the problem institution, placing the institution under curatorship, or liquidating it,” reads part of the Bill.

“The Reserve Bank’s powers under the section will be subject to limitations: measures taken will have to be proportional to the risk posed by the problem institution, and any compulsory acquisition of property will have to be compensated. Generally, creditors and other persons aggrieved by measures taken by the Reserve Bank under the new section will be restricted to claiming compensation unless the measures were fraudulent, corrupt or actuated by bad faith.”